Cobequid Pass Toll Highway, The BEST example of how a public/private

PARTNERSHIP should work"

Our Purpose/Mandate

The Highway 104 Western Alignment Corporation was created by statute, Highway 104 Western Alignment Act, in 1995 with the sole purpose to finance, design, construct, operate and maintain a 45 kilometer four lane, divided section of the Trans Canada Highway in northern Nova Scotia known as the Cobequid Pass Toll Highway. The Highway 104 Corporation's current mandate is to administer the agreements (which allowed the highway to be built) which includes managing toll revenue collection, maintaining the schedule to repay investors, and funding the annual and long term maintenance of the facility.

A Key Player In An Innovative Partnership

The Cobequid Pass Toll Highway was one of Canada's first highways to be built through public-private partnering.

The Highway 104 Corporation was given the authority to borrow money to finance the highway and to enforce toll collection. The financing for this project has been recognized internationally for its innovation. In awarding the project North American Deal of the Year honours, editors at the British magazine Privatization International Infrastructure Yearbook wrote, "the first Canadian public-private partnership to meaningfully balance risks and rewards between government, the contractor/operator and the lenders."

The Safety Concern

Safety was the primary reason for the Cobequid Pass Toll Highway being built. Its location defines both its significance and its hazard: as the gateway to Nova Scotia, it serves tourists and local travelers, as well as transporting goods and services west to major North American markets, and east to international shipping lines.

The existing two-lane highway had the highest percentage of trucks traveling on it in the province: on any given day, one in four vehicles -- high-speed transport trucks heading to market and low-speed local traffic turning on and off the road -- presented an ongoing hazard. More that 50 fatalities in the previous 10 years made the highway an intolerable statistic, and one the new highway was designed to change.

The Partnership Solution

In 1993 the Province had one of the highest per capita public debts in Canada, and the federal government was reigning in its spending. Both circumstances eliminated traditional options for the badly needed highway: capital borrowing and federal cost sharing.

A public-private partnership allowed the both governments to make financial contributions it could both afford. A further benefit of the partnership was timing. With private investors, the funding was in place at start-up, allowing the highway to be built in 20 months with economies of scale efficiencies. Because safety was the major concern, an accelerated construction schedule became important.

But before moving toward a business arrangement for the new highway, the Province laid out two critical and fundamental objectives: the title of the highway must be held by the Province; and financing would be repaid only through toll revenue and without guarantees of the debt by the Province.

These criteria resulted in the creation of the Highway 104 Western Alignment Corporation by an Act of the Provincial Legislature in 1995. The Highway 104 Corporation, operating independent of government, permits non-recourse financing, meaning private investors have no claim on government assets.

These issues were all the result of intense negotiations that determined in detail how the cost, risks, and rewards of a project were to be shared -- the essential nature of a public-private partnership. The public-private partnership that constructed the new highway was borne out of extensive and often complicated negotiations between the Provincial Government and the selected contractor, Atlantic Highway Corporation.

With the pressing need for a safer highway, and at the same time, pressing provincial budget concerns, the Highway 104 Western Alignment Corporation has been integral to the success of this innovative public-private partnership.